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Long-Term Finance in Côte d’Ivoire : Country Diagnostic Report - September 2019
While developing countries and the donor community have in recent years placed considerable emphasis on strengthening access to financial services and on designing national financial inclusion strategies, the traditional role of finance in allocating scarce resources to the economy’s most productive uses has attracted less attention. The Africa Long-Term Finance (LTF) Initiative seeks to rebalance the focus toward this perspective by (a) assembling data and establishing a “LTF Scoreboard,” on which individual countries are benchmarked against one another on the availability of LTF, and (b) undertaking country diagnostics in a number of African countries to identify specific hurdles faced in deepening markets for LTF and ways such hurdles could be overcome. This report is the first of these country-diagnostic reports.
This country report on Côte d’Ivoire focuses on infrastructure, housing, and enterprise finance. It applies a flexible definition of LTF that reflects the differing productive life of assets being financed, which may vary from 20 to 30 years in the infrastructure and housing sectors and 5 years or less for enterprises. Gaps in the provision of LTF arise because of the varied maturities available to those financing investments in these sectors. Long-term funding for infrastructure in Africa is predominantly provided by circumventing the domestic intermediation process altogether – by using long-term funds provided by governments or donors or by obtaining capital in the form of foreign borrowing or direct investment. Enterprises, particularly if small and medium-sized, face serious challenges in accessing adequate and affordable long-term financial resources. Rather than funding themselves on formal markets through bank loans or the issuance of debt and equity, small and medium-sized enterprises (SMEs) rely on funding provided by family and friends, even though such funding is unlikely to be sufficient in terms of size and maturity to satisfy their investment needs. Housing finance is found to be scarce and offered over too short a term, and therefore it is unaffordable for many households, leading to incremental construction.